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What is a Purchase Order?

A purchase order is a document that is issued by a buyer to a seller, indicating the type and quantity of goods or services they wish to purchase. It is a legally binding document that specifies the details of the transaction, including the price of the goods or services, the delivery date, and the payment terms. The seller will use the purchase order to fulfill the order and send an invoice to the buyer for payment.

Most purchase orders start as requisitions, also known as "unapproved Purchase Orders."

Reasons to use Purchase Orders

There are several benefits to using purchase orders and requisitions, including the following:

    • Improved accuracy: Purchase orders and requisitions help to ensure that the correct goods or services are ordered and that the correct information is recorded. This can help to reduce errors and mistakes, which can save time and money.

    • Better control over spending: By using purchase orders and requisitions, organizations can better control their spending and avoid overspending or making unnecessary purchases. This can help to improve the overall financial health of the organization.

    • Enhanced vendor management: Using purchase orders and requisitions can help organizations to manage their relationships with vendors more effectively. This can improve the quality of the goods or services they receive and help to ensure that they are delivered on time.

    • Streamlined processes: Purchase orders and requisitions can help to streamline the procurement process by providing a clear and standardized way of requesting and approving purchases. This can save time and reduce the likelihood of delays or misunderstandings.

    • Increased accountability: Purchase orders and requisitions can help to increase accountability within an organization. They provide a clear record of the goods or services that have been ordered, which can be used to track the status of the order and ensure that it is fulfilled as agreed.

Purchase Orders are often automated to achieve additional gains. Here are some.

    • Improved accuracy and efficiency: Automation can help to reduce errors and improve the accuracy of purchase orders. This can save time and reduce the need for manual data entry and correction.

    • Enhanced visibility and control: Automated purchase order systems can provide real-time visibility into the status of orders and allow organizations to monitor and control their spending more effectively.

    • Streamlined processes: Automation can help to streamline the purchase order process by reducing the need for manual tasks and paperwork. This can save time and improve the efficiency of the procurement process.

    • Better vendor management: Automated purchase order systems can help organizations to manage their relationships with vendors more effectively. This can improve the quality of the goods or services they receive and help to ensure that they are delivered on time.

    • Increased security: Automated purchase order systems can provide enhanced security and protect against unauthorized access or fraud. This can help to reduce the risk of financial losses and protect the organization's sensitive data.


See Also

Purchase Order System, Purchase Order Process, Purchase Order Receiving, Procure To Pay Software.

Example Usage

A potential buyer might say to his supplier, "Thanks James, to get started I'll get you a Purchase Order. I can issue it from my Aestiva Purchase Order system. I'll have it to you pronto ." The best Purchase Orders systems, like Aestiva Purchase Order, make the process of creating and managing purchase orders easy and intuitive.